Forex Weekly Outlook June 4 ~ 9, 2017

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Last week ended on a positive note with U.S. stock indices wrapping up in green, DJIA at a gain of 0.6%, S&P 0.9%, and the Nasdaq at a modest gain of 1.5%.  Overall losses in the USD were prevalent as Friday’s Non-farm Payroll Report disappointed.  Here’s a quick summary for major pairs ending the week:

  • EURUSD gained 0.98%
  • GBPUSD gained 0.2%
  • USDJPY lost 0.70%
  • USDCAD gained 0.31%
  • AUDUSD remained unchanged (2 weeks)
  • NZDUSD gained 1.20%
  • USDCHF lost 1.19%

Key Events For Last Week

Obviously the main focus was on the Nonfarm Payroll report on Friday, which came in at a disappointing 138K versus the 186K of expectation, but then again the surprising drop of Unemployment to 4.3% lifted market sentiment a bit, although overall sentiment was one that’s relatively neutral in my opinion.

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Here’s a closer look at the figures from Nonfarm Payroll:

  • Unemployment Rate 4.3% v 4.4%E (Lowest since May 2001)
    • Underemployment Rate: 8.4% v 8.6% prior
    • Change in Household Employment (civilian labor force): 159.8K v 160.2K prior
    • Civilian Labor Force Participation Rate: 62.7% v 62.9% prior; 5-month low
    • Number of unemployed: 6.861M v 7.056M prior – Labor force: 160.2M v 160.1M prior
  • Non-Farm Payroll Employment Report – 138K v 185KE
    • Change in Private Payrolls: +147K v +175Ke
    • Change in Manufacturing Payrolls: -1K v +5Ke
    • Birth-Death Adjustment: +230K v +255K prior
      • Prior Change in Nonfarm Payrolls revised lower from +211K to +174K
      • Prior Change in Private Payrolls revised lower from +194K to +173K
      • Prior Manufacturing Payrolls revised higher from +6K to +11K 
  • Average Hourly Earnings 0.2% v 0.2%E, Y/Y 2.5% v 2.6%E, Av. Weekly Hours 34.4 V 34.4E
    • Prior Average Hourly Earning MoM revised lower from 0.3% to 0.2% 

What a mixed bag of news!  No wonder the market reacted the way it did.  But overall I believe it was a USD negative news but not negative enough to change the general consensus and market sentiment.  USD is still strong and well-supported long-term and the Fed is still going to hike rate again this month, as long as NFP comes in above 100K, there is no threat to continued strong USD in my opinion.

Key News Events For This Week

Aside from the High-Impact tradable news releases listed in our Calendar page, the main mover is likely the ECB rate decision on Thursday.  As a matter of fact, I believe the entire market is going to revolve around it as ECB has the ability to move the market and temporarily change sentiment, if they decide to do so.

I will be paying attention to any news out of Europe, especially from any ECB members, and of course from Mr. Draghi himself if he decides to comment before the press conference.  The Revised GDP out of Europe just prior to ECB meeting on Thursday is also very important, especially if we were to get any surprises there…  I don’t believe it is tradable but definitely worth the attention.

Also it is important to note there are tons of PMI’s scheduled this week.  PMIs are leading indicators which help to predict market sentiment and I’ll recommend paying close attention to them.

Currency Outlook

EURUSD: Euro is going to be driven by the ECB meeting this week, so whatever analysis I provide may not be accurate at the time you read it… But for argument sake I see EURUSD on a recovery path from a long-term point of view, so I’ll be looking to BUY on dip…  However, if the market were to sell-off the Euro after ECB meeting, then be careful as there must be a reason for the sell off…

GBPUSD: The Sterling is not catching any breaks lately, with the pressure of general elections on the currency and series of terrorist attacks, market is definitely concerned over the GBP.  Therefore I’d recommend to steer clear of the GBP for now until we get a better handle.

USDJPY: I would be looking to BUY on dip for the currency.  Although recent drops has not been very kind to long traders, I believe it’s just a matter of time to see USDJPY back above the 114.00 level as a combination of USD support and better news out of Japan.  Obviously if situation in North Korea were to intensify or larger scale of terror incidents were to hit, then JPY is likely to strengthen, so watch out for that…

USDCAD: Ever since BOC claimed that Crude prices has reached a balance, implying this is the lowest level in crude, CAD has been creeping up against the USD bit by bit.  This may very well be the turning point for USDCAD from long to short, so keep that in mind when you trade the pair.

USDCHF:  Not much is going on here, overall CHF is still well manipulated by the SNB thus I will stay away from it.

AUDUSD:  Similar to the statements of the BOC to crude oil prices, RBA is also calling China’s economic adjustment to be mostly done, thus I believe AUD is on the way up and I’ll be looking to BUY on dip when possible.

NZDUSD:  300+ pips of run since early May has pushed this pair above the 0.7100 level.  We could be heading towards the 0.7250 area but it will take a lot of momentum to push pass this level, thus I will use caution when going LONG.  Obviously a bit of retracement is due before continuation of the trend, so I’ll wait for a drop before taking a long position.

 

Thanks and Happy Trading,

 

FUNDAMENTALS
Forex Weekly Outlook August 14 ~ 18, 2017
Forex Weekly Outlook August 7 ~ 11, 2017
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Forex Weekly Outlook June 19 ~ 23, 2017
Forex Weekly Outlook For June 11 ~ 16, 2017
About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

You can find more information about me on my Google Profile.

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